The School Budget for 2018-2019 was presented to the School Board for approval at the meeting last night and was adopted. The Adopted Budget includes funding for the items outlined in the March 15^th budget blog including the following:

• One-step salary increase for all employees (1.55% average)
• 1% shift in Teacher Scale (steps 1-30)
• 1% stipend for teachers who are over the top of the Teacher Scale
• Health insurance benefit increase (school board share)
• Elimination of the KeyCare 200 plan
• Retention of the KeyCare 1000 plan with a $500 (or $1000 for dependent coverage) cash deposit into an employee health reimbursement account (HRA) on July 1, 2018
• Mandatory increases in 3^rd party vendor contracts (software, custodial, etc)
• Substitute pay rate increase for teachers, instructional assistants, and nurses
• Athletic supplement pay increase (Phase 2 of Compensation Plan)
• Governor’s School transportation
• Guidance and Dean of Student positions during Cave Spring High renovation

Since the General Assembly adjourned on March 10^th without adopting a budget, they are reconvening on April 11^th to continue work on the state budget. If the final state budget results in additional funding for RCPS, the School Board will review potential add back items and amend the Adopted Budget at that time. It is hoped that the academic supplement increase can be added back at that time as that will be the final component of the Evergreen Compensation Study conducted in 2016.

After budget work sessions on 2/22, 3/8, and 3/15 and in consultation with our outside health insurance consultant, the School Board made the decision to eliminate the KC200 plan and move all employees to the KC1000 plan with a corresponding HRA cash account as of July 1, 2018. The group health plan will be re-bid in Fall 2018 in search of alternative health plan options that may offer more choice and financial flexibility to employees. The insurance renewal rates for 2018-2019 for health, dental, and vision insurance as follows:

 Although the School Board approved $666,635 in additional funding for employee health benefits, the employee increases are still significant and reflect the actual employee medical claims experienced in the past year and projected by the insurance carrier for next year. In comparison to neighboring school districts, RCPS employee rates for health insurance remain very competitive as shown on these graphs:

The School Board will present the Adopted Budget to the Board of Supervisors on April 24^th for their review and consideration with approval anticipated in early May. Of course, the timeline may need to be adjusted as it relates to when the final state budget is approved in Richmond.

 IMPORTANT REMINDER: Employees who want to qualify for the Health Insurance Wellness Rates must complete the lab work, online health questionnaire, and in-person medical review with a Marathon provider at the North Center no later than May 31^st. Appointments at the Marathon Health and Wellness Center North are filling up very quickly. The Health Center has added a staff member for the week of Spring Break (April 2-6) to allow for more openings for employees who have not completed these required wellness steps to qualify for the wellness rate in 2018-2019. This would be a perfect opportunity to take advantage of daytime appointments. If you have not made your appointment yet, please call and schedule one as soon as possible before openings are booked and you miss out on the opportunity to reduce your health insurance costs by May 31, 2018.

At the budget work session tonight, Dr. Killough presented the Superintendent’s Proposed Budget for 2018-2019. The proposed budget has been built using the Senate version of the state budget as a result of the General Assembly adjourning last weekend without adopting a state budget. The General Assembly will reconvene on April 11th to continue work on the state budget. In the meantime, the School Board agreed to balance to the lowest version of the state budget (the Senate version) and amend the school budget at a later date once the final state budget has been adopted by the General Assembly.

The Superintendent’s Proposed Budget for 2018-2019 includes the following:

• One-step salary increase for all employees (1.55% average)
• 1% shift in Teacher Scale (steps 1-30)
• 1% stipend for teachers who are over the top of the Teacher Scale
• Health insurance benefit increase (school board share) and elimination of the KeyCare 200 plan which will be replaced by the KeyCare 1000 plan with a $500 (or $1000 for dependent coverage) cash deposit into employee health reimbursement accounts (HRA)
• Mandatory increases in vendor contracts
• Substitute pay rate increase for teachers, instructional assistants, and nurses
• Athletic supplement pay increase (Phase 2 of Compensation Plan)
• Governor’s School transportation
• Guidance and Dean positions during Cave Spring High construction

If the state budget results in additional funding for Roanoke County Schools after the General Assembly reconvenes on April 11th, the following budget requests were prioritized to add back to the 2018-2019 budget:

• Academic supplement pay increase
• Increase in speech/PT service capacity
• Additional instructional assistant positions
• New secondary achievers day and night programs to mitigate private day school placements and related future CSA spending increases

 In addition, the School Board reviewed the following plans included in the budget proposal and presentation:

• Bus Replacement Plan
• Capital Improvement Plan
• Capital Maintenance Plan
• Technology Replacement Plan
• Health Insurance KeyCare 1000 Plan Rates and Comparison to Neighboring School Districts

No changes to the Superintendent’s Proposed Budget were made by School Board members at the work session. The Proposed Budget for 2018-2019 is scheduled to be presented for adoption at the March 22nd board meeting next week. The health insurance renewal rates outlined in the blog update on March 8th will be presented for approval at the same meeting.

Although we are nearing the end of the official budget cycle, the process will be extended somewhat this year by the need to amend the budget when the General Assembly completes their work on the state budget next month. It is our hope that we will be in a position of being able to add back a budget priority rather than make cuts to the Superintendent’s Proposed Budget to be approved at the March 22nd board meeting. The materials presented in work session this evening are available in Board Docs and on the web site under the Finance link. As always, stay tuned for updates next week.

The School Board met in work session again last night to review updated revenue projections for the 2018-2019 budget. The House and Senate versions of the state budget reflect new revenues to Roanoke County Schools of between $1.4 and $1.9 million. The Senate budget provides the lowest revenue allocation to Roanoke County Schools and is the version we will be balancing to until the General Assembly budget is adopted and we have final revenue estimates. If the revenue increases at that time, it is easier to add back an item that was cut to balance the budget than it is to identify further budget cuts.

At an earlier work session, staff presented a proposal to fund a one-step increase on the pay plans. At the work session this evening, staff presented an additional salary option for board consideration that included a 1% shift in the Teacher Scale. This shift would move the entire scale (steps 1-30) up by 1% resulting in a new beginning teacher salary and a new top of scale teacher salary. It was recommended in the 2016 Compensation Study that the board consider shifting the scales every few years to ensure that the pay ranges remain competitive along with the placement of employees within those ranges. For purposes of discussion, the shift in the scale would enable teachers to move up a step (assuming they are not at the top of the scale) and receive the benefit of the shift in the scale as well as a one-step increase. No steps would be added to the 30 step scale so that it continues to remain possible for teachers to “reach the top”. The board was also presented with costs to provide a 1% stipend for teachers who are over the top of the scale and will not benefit from a shift in the scale or a one-step increase.

The group health insurance increases for 2018-2019 were reviewed with the School Board again and the board reaffirmed their direction to move to only one plan option for 2018-2019, which will be the KeyCare 1000 plan with a $1,000 deductible and a $500 ($1,000 for employees electing dependent coverage) cash deposit into a Health Reimbursement Account as of July 1, 2018. The proposed rate increases for the renewal with Anthem are significant and represent the projected employee medical claims for the next year based on school employee medical claims over the past year as well as medical inflation. Employees on the current KeyCare 200 plan (with $200 deductible) will move to the KeyCare 1000 plan. Although the rate increases are significant, the dependent coverage employee premiums remain much lower than those available in neighboring school divisions. The proposed rates will require additional funding in the 2018-2019 budget of $666,635 which would be the equivalent of a .65% salary increase for all employees. Funds for health insurance rate increases compete with funds for salary increases.

The proposed rates that are expected to be included in the 2018-2019 budget for the KeyCare 1000 plan based on 12 month deductions are as follows:

Finally, the School Board reviewed an out of balance budget with updated revenues from the Senate Budget and previously prioritized expenditure including:

• One-step salary increase for all employees (1.55% average)
• 1% shift in Teacher Scale (steps 1-30)
• 1% stipend for teachers who are over the top of the Teacher Scale
• Health insurance benefit increase (school board share)
• Mandatory increases in vendor contracts
• Substitute pay rate increase
• Athletic supplement pay increase
• Academic supplement pay increase
• Governor’s School transportation
• New In-School Detention behavioral program
• Guidance and Dean positions during Cave Spring High construction

Although all of these budget requests are considered high priority, the reality is that they exceed the available new funding by $2,409,220. This necessitates some very difficult decisions in terms of which budget requests are able to be funded within available dollars.

The School Board will be meeting in work session next on March 15 to review further revenue updates from the General Assembly (if available) and a recommendation to balance the budget dollars for 2018-2019.   The School Board must submit an adopted school budget to the Board of Supervisors no later than April 1^st. There is much still to be done as the final days of the budget season approach. As always, materials presented in budget work sessions are available for review in both Board Docs and on our web site under the link to the Finance Office.

The School Board met in work session last evening to review the budget requests for the largest portion of the school budget reflecting the investment in our employees.  The Roanoke County Schools compensation package is composed of a salary component as well as a significant benefits package including the Virginia Retirement System pension plan, social security, life insurance, health credit, disability insurance, worker’s compensation, unemployment, health and dental insurance, paid leave and holidays, supplemental pay for additional academic and athletic duties, national board teacher bonus, voluntary retirement plans, and an employee health and wellness center.  The salary and benefits package represents 84% of the school budget and totaled $121,628,411 for the 2017-2018 school year.

The Superintendent has identified employee compensation as a focus in the proposed 2018-2019 budget and is recommending a step increase on the Pay Plan for all employees.  A market study was completed on the competitiveness of salaries at RCPS compared to neighboring school districts in 2016 and market increases were included in the budget for 2016-2017 to bring all positions up to the market at that time.  The School Board committed to funding a step increase in 2017-2018 and the proposal for 2018-2019 reflects an ongoing intention to sustain the competitiveness of the Pay Plan by including another one-step increase.  The cost to provide a one-step increase is $1,583,000. 

In addition, the Superintendent has proposed implementation of Phase II of the compensation study which addresses supplements paid for academic and athletic duties as well as substitute rates.  The cost to implement Phase II is $636,784 and would increase the competitiveness of all academic and athletic supplements as well as the rates paid for teacher and IA substitutes.

The School Board also heard a presentation on the renewal of the employee health plan for 2018-2019 which was sobering and significant.  Claims for RCPS increased significantly for the past year and are projected by the insurance carrier to be $19.3 million for next year which represents a 16% increase.   Claims increases are driven by both medical inflation (in the double digits) and actual RCPS employee claims.  A review of the employee only and family rates paid by employees of neighboring school districts was presented again this year reflecting the significantly lower rates paid by RCPS employees for health coverage.  The School Board discussed the pros and cons of funding salary increases versus health insurance increases and the ultimate advantage to employees of higher lifetime earnings from salary increases.  More information and the comparison of RCPS health plan rates to other localities will be available on the Finance web site under the Budget Information link.

There was a significant shift in the employee election of health plans this year with 443 employees moving from the KC200 plan to the KC1000 plan.  The KC1000 plan is a $1000 deductible plan with a $500 health reimbursement account available to the employee as of July 1 each year.  This shift resulted in all 443 employees paying less for health coverage this year.  We anticipate that another significant shift will occur in the next renewal as employee rates increase again.

Proposals for the following options for the 2018-2019 health renewal were discussed:

1. Continue to offer both the KC200 and KC1000 plans.  Employee rates will increase for all employee and dependent coverage options.  The employee benefit for the lower deductible plan (KC200) would be frozen at the current level.  This will likely result in another significant shift to the KC1000 plan and poses a risk that there will be a deficit in premiums collected to pay the projected claims expense for next year.  The cost of this option is $1,099,503.
2. Eliminate the KC200 plan.  Employee rates would increase for all employee and dependent coverage options and will be set to accumulate the total projected claims expense from the insurance carrier.  The cost of this option is $666,635.  Employee rates would be set to meet the following criteria:
• Employee only pays 10% of the total premium (School Board pays 90%)
• Employee plus 1 child pays 30% of the total premium (School Board pays 70%)
• Employee plus spouse pays 40% of the total premium (School Board pays 60%)
• Employee plus family pays 40% of the total premium (School Board pays 60%)

Both options require significant new budget dollars and are competing with the same budget dollars that can be used for salary increases and other budgetary needs.  Projected rates have been developed based on these options and are also included in the power point presentation on the Finance web site.  The consensus of the School Board is to eliminate the KC200 plan, retain the KC1000 plan, and continue to prioritize the one-step increase on the Pay Plan as we work to balance the 2018-2019 budget.

A preliminary recap of the budget gap was the final part of the budget work session last night and reflected the revenues from the Governor’s budget (to be updated in the next 2 weeks with the House and Senate versions when they are released to school districts) and the Superintendent’s Focus on the following budget increases:

• Employee compensation (one-step)
• Employee health insurance (options outlined above)
• Academic and athletic salary supplements (Phase 2 of compensation study)
• Substitutes (Phase 2 of compensation study)
• Governor’s School transportation
• Cave Spring High staffing adjustments during construction
• New in-school behavioral intervention program 

If we include the priorities outlined above, the budget is out of balance at this point in the budget development process by approximately $1.5 million.  The numbers will become clearer as the General Assembly finishes their work in Richmond over the next three weeks.  The School Board now enters the most difficult part of the budget process in making difficult decisions about priorities within available funding.  Several work sessions are scheduled in March to allow for the immediate dissemination of information released from the General Assembly and Virginia Department of Education.  The budget blog will be updated accordingly as well as the Finance web site postings of work session materials.

In the meantime, enjoy the early Spring/Summer temperatures and stay tuned until next time.

Happy Valentine’s Day! Let’s hope that love is in the Richmond air today as the General Assembly reaches “crossover day” in the annual General Assembly budget process. Crossover occurs when the two houses of the General Assembly – the Senate and the House of Representatives – complete their individual budget plans and send to each other for consideration. After both bodies review the other budget, they will likely disagree on a unified budget and then the next step will involve a committee working to find compromises that will garner enough votes to pass in both houses. Over the next week or so, localities will be able to dissect the two proposed budgets and begin to identify the likely revenues coming our way from the state for our 2018-19 budget.

In the meantime, the School Board conducted another work session last week to review the proposed budgets for Other Funds. Other Funds are specialty funds that support the operations of the school division but are earmarked for specific purposes including the following:

• Nutrition Fund – self-supporting funds to provide daily breakfasts and lunches to students and staff.
• Instructional Resources Fund – funds to provide student textbooks (in paper and/or digital format) and other consumable instructional resources.
• Bus Fund – funds to replace 150 school buses over a 15 year cycle.
• Technology Fund – funds to replace district wide technology including cameras, building security systems, computer labs, staff and student computers, active boards, telephones, servers, networks, library computers, and wireless connections.
• Grant Fund – funds derived from federal, state, and private grant sources and designated for specific purposes.
• Capital Fund – funds for the Capital Improvement Plan, Capital Maintenance Plan, and other minor capital projects.

Next week, the School Board will meet in work session to review the largest portion of the school budget. The February 22^nd work session will be devoted to employee compensation and benefits which represents approximately 85% of the total school operating budget.  If information is available from Richmond on the House and Senate budget proposals, that will also be included in the February 22^nd work session.  Presentations for all budget work sessions are available on the Finance page of the division web site.  There will be a lot of moving parts of the budget over the next 5 weeks leading up to the scheduled School Board adoption on March 22, 2018 so stay tuned!

Penny Hodge

On January 25th, the School Board held a budget work session on the district-wide technology plan. Technology components are integrated into all aspects of the school division operations including direct use of computers in the classroom, student and teachers laptop, telephones, internet access, building security, visitor access to buildings, the camera system, and the servers and networks that all of these components run on.  Most technology equipment has a limited life and must be replaced once warranties expire in order to ensure the continued successful operation of the division resources.  In order to fund these critical replacements, a 6-year replacement plan is updated each year.  The 6-year replacement plan was discussed at the work session with a focus on three of the top initiatives to be rolled out over the next few years. The initiatives include:

1. Every classroom in Roanoke County Public Schools has an aging ActivBoard installed over 10 years ago (early estimates of their useful lives were 7 years). The IT staff created a 3-year replacement plan targeted at replacing the oldest models in classrooms first.
2. Network security is a must in today's world with a myriad of new and more advanced ransomware, hacking and viruses that are not only taking systems down but also stealing data. In order to protect the school divisions data and upon recommendation from the cyber assessment conducted earlier this year, awareness training is being rolled out to help all employees understand how to identify attacks through email both at work and at home.
3. The building security system component warranties are due to expire in September 2018 including software renewals for card access, cameras, and the panic system, in addition to the hardware related to the Lobby Guard visitor access system.

Some good news discussed included the approval of the division reimbursement request for federal E-rate reimbursement on eligible technology purchases which can be redirected back into the technology needs of the school division.

As we close out January, stay tuned for more information on important steps in the development of the 2018-2019 school budget. Here is a list of upcoming Budget Work Sessions:

• Work session – February 8, 2018
  • Bus replacement plan
  • Other fund budgets
• Work session – February 22, 2018
  • Compensation, Benefits, Health Insurance
  • House & Senate Crossover Budgets (if available)
• Work session – March 6, 2018
  • Crossover budgets (if not available for 2/22 work session)
• Work session – March 13, 2018
  • TBD (General Assembly adjourns on March 10 but revenue allocations may not be available yet)
• Work session – March 15, 2018
  • TBD
• Work session – March 20, 2018
  • Last date for Presentation of Superintendent’s Budget
• Work session – March 22, 2018
  • SB adopts 2018-2019 budget
• FY19 Budget due to Board of Supervisors – April 1, 2018

And from earlier this month…on January 11, 2018 the School Board conducted a budget work session to review enrollment, the Governor's Proposed Revenue Budget, and budget focus and initiatives.  This is the first year of the state 2-year budget (2018-19 and 2019-20). Some interesting components of the state budget include:

• The Governor’s budget is based on a new local wealth index, which for Roanoke County Public Schools went from .3587 to .3620. This means the County can afford a slightly higher share of the cost of public education, according to the state formula, and the Commonwealth funding for RCPS is reduced.
• A state approved salary increase was not provided in the Governor’s proposed budget for 2018-2019; however, a 2% increase in the state budget was projected for 2019-2020 to begin on December 2019 (state funding for only 58% of the 2nd year and none for next year).
• There was a reduction in the VRS teacher rate which will free up some expenditure budget.

The budget increase requests submitted throughout the past year were detailed in the Work Session materials with the following identified as the Superintendent’s focus for the 2018-2019 budget:

• Investment in sustainability (necessary, essential, mandatory increases like utilities, insurance, and other costs that are required to sustain current programs)
• Investment in people
  • Step increase on pay plan
  • Substitute pay increase
  • Stipend & supplement increase (Phase 2)
  • Health insurance premium increase
• CSHS staff positions during construction
• In-School detention and guidance positions

The School Board discussed this focus, while also wanting to revisit some other budget requests.  Stay tuned as we work through more pieces of the budget puzzle in the coming work sessions.

Happy Holidays!

As we begin work on the budget for next year (2018-19), I will once again use the budget blog as a means of sharing information with all of you. So, here we go!

The School Board approved a budget calendar for the 2018-19 budget cycle at their meeting on December 14th. The calendar includes dates for important budget meetings, hearings, and work sessions with the School Board, Principals, Employee Advisory Committee, and the public. You are invited and encouraged to attend any of these meetings to learn more about the budget process. Important dates in January include the following:

• January 10th – General Assembly convenes in Richmond to begin work on the state budget (this is about 50% of our revenue)
• January 11th – School Board Meeting with board reorganization for 2018 and work session on the Governor’s Proposed Budget for 2018-19 (our first look at state funds for our 2018-19 budget)
• January 25th – School Board Meeting and work session on the Technology Replacement Plan

As many of you may remember, the school district opened the on-site Marathon Wellness Center in October 2016 to address rising health insurance costs for the division and employees. As a reminder (you should be seeing several reminders in emails from Marathon), in order to qualify for a lower health premium in 2018-19, you must complete the Wellness 1-2-3 Plan which requires a visit to the Marathon Wellness Center and completion of the requirements by May 2018. As the time gets closer, it may be harder to get appointments so don’t wait, go now! You do not have to wait 365 days from your last wellness visit. Marathon is open over the Christmas break so please contact them at 540-795-2279 to schedule your wellness appointment soon.

As we begin the budget cycle, I will continue to share budget and finance related information with you and welcome any suggestions you may wish to share with me to make our process as transparent and informative as possible.